Sequester deadline looms; cuts would hurt Staten Islanders and nation

Following a closed-door party caucus, House Speaker John Boehner of Ohio, accompanied by fellow GOP leaders, meet with reporters, on Capitol Hill in Washington, Tuesday, to challenge President Obama and the Senate to avoid the automatic spending cuts set to take effect in four days. Speaking at the Republican National Committee headquarters, from left are, Rep. Lynn Jenkins, R-Kansas, Rep. Cathy McMorris Rodgers, R-Wash., Boehner, and House Majority Leader Eric Cantor of Va. (AP Photo/J. Scott Applewhite)Associated Press

STATEN ISLAND, NY -- Cuts to public schools, college work study programs and early childhood programs such as Head Start; a scaling back of funding for job search assistance; less money going into law enforcement and local FBI; fewer meals for seniors, some 600,000 New York families removed from the federal program that ensures babies get enough to eat; smaller weekly checks for the long-term unemployed.

Many Staten Islanders will personally experience economic consequences if the Republican Congress and Democratic President Barack Obama do not reach an agreement by Friday on the fiscal debate simply known as the sequester.

With an eerie absence of conversation in Washington over possible compromise, the Obama Administration posted information showing how people in every state may be affected even this year, if a deal is not reached over monumental spending reductions.

Republicans counter the dire predictions are overblown and do not warrant changing their position on tax loopholes and keeping the tax structure unchanged for all Americans, including the very rich. But economists nearly universally predict the terms of the sequester could devastate the nation's financial recovery and future health.

Americans meanwhile, seem somewhat disengaged from process, assuming that the political brinksmanship will find a resolution before the most devastating affects take hold.

The cutting set to start Friday is "haphazard, and cuts good programs and bad. It's not good budgeting practice," says Mark Zandi, chief economist at Moody's Analytics.

When a government spends more than it collects in taxes in a year, it runs an annual deficit. Every annual deficit adds to the accumulated federal debt.

For the United States, both numbers look bad. Annual deficits have exceeded $1 trillion the past four years. The federal debt has reached $11.7 trillion, not including money that federal agencies have borrowed from each other, including from the Social Security trust fund.

If nothing is done about the long-term budgetary burdens, the debt will reach $19.9 trillion by 2023, according to the Congressional Budget Office.

Efforts to close the budget gap have been stymied by Republicans' refusal to accept new tax increases and Democrats' insistence that any spending cuts be matched by tax increases. Democrats are also reluctant to shrink spending on popular entitlement programs such as Medicare and Social Security.

"By far the preferable
policy," according to Macroeconomic Advisers, "is a credible long-term plan to
shrink the deficit more slowly through some combination of revenue
increases within broad tax reform, more carefully considered cuts in
discretionary spending, and fundamental reform of entitlement programs."

Cutbacks by state and
local government have dragged down economic growth the past two years.
Deep federal cuts now would worsen things. Macroeconomic Advisers
predicts the automatic cuts would reduce economic growth this year to 2
percent from 2.6 percent, wipe out 700,000 jobs and keep unemployment at
7.4 percent or higher through 2014.

"We're right on the edge of what the economy can digest" in spending cuts, said Zandi.

While Washington watchers are growing increasingly concerned that this time around lawmakers will not reach an eleventh-hour resolution, the American public is disengaged.

After being whipped into a froth over possible economic doom over the end-of-the-year's fiscal cliff, only to see it averted with major decisions kicked down the road, Americans are yawning this one off.

Only 27 percent of those surveyed for a Pew Research Center/USA Today poll last week said they had heard a lot about the looming automatic spending cuts.

Less than a third think the budget cuts would deeply affect their own financial situation, according to a Washington Post poll. Sixty percent, however, believe the cuts would have a major effect on the U.S. economy.